At a closed-door meeting of eurozone finance ministers, President Lagarde stated that, provided certain clear eligibility criteria are met, the ECB “has the means to counter unjustified and disorderly market movements that threaten the smooth transmission of monetary policy.”
If the ECB takes any action, there is a possibility that the selling of the euro might subside somewhat.

However, such a policy response would also constrain the ECB’s own policy.
It could be interpreted as a move toward monetary easing; in that case, while the turmoil in national government bonds would subside, the ECB’s monetary easing would likely be interpreted as further fueling the selling of the euro.

The Wall Street Journal has published a feature article on the situation in France.
Titled “France’s Reliance on ‘Magic Money’ Turns into a Debt Bomb,” the article argues that the problem is serious: with the domestic political situation at a deadlock, funds raised at low interest rates are maturing, forcing the country to refinance at higher rates.

On the other hand, many economists view the decline in French government bonds as a “buying opportunity.”
They argue that there is no basis for the widening interest rate spread with Germany, given that there have been no significant changes.

However, there is only so much major financial institutions can say amid such a crisis.
The journalists’ views are likely more accurate.

Although the situation has calmed down for now, euro selling is likely to resume eventually.
The French crisis could also prompt a flow of funds back into the yen, so investors should watch for a decline in cross-yen pairs.